Five Years After: European Union Membership and Macro-Financial Stability in the New Member States
IMF Working Papers, March 1, 2009
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- Five Years After: European Union Membership and Macro-Financial Stability in the New Member States
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Bibliographic details
- Authors: Martin Cihak, Wim Fonteyne
- Published: March 1, 2009
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451872156.001
Summary
- The proximity of the European Union, the prospect of membership, and actual entry by the New Member States (NMS) increased economic and financial integration in the region, leading to fast economic growth based on sizeable capital inflows.
- EU membership helped in developing sound macroeconomic and financial stability frameworks in the NMS.
- These frameworks remain work in progress and as such could not safeguard against private sector exuberance or risky policies, especially in the face of an unprecedented global financial crisis.
- Hence, more prudent policies and further strengthening of policy frameworks, especially with respect to financial stability, seem warranted.
Major findings
- EU proximity, membership prospects, and accession materially increased economic and financial integration for the NMS.
- Integration produced fast economic growth underpinned by sizeable capital inflows.
- Institutional and policy frameworks for macroeconomic and financial stability improved with EU membership.
- Despite improvements, those frameworks were incomplete and insufficient to prevent:
- private sector exuberance, and
- risky policies.
- The shortcomings were particularly evident during the unprecedented global financial crisis.
Policy implications and recommendations
- Adopt more prudent macroeconomic policies to reduce vulnerability to capital-flow-driven booms.
- Further strengthen policy frameworks, with priority on financial stability regimes.
- Continue reforms aimed at consolidating macroeconomic and financial resilience in the NMS.
Context and metadata extracted from the page
- By Martin Cihak, Wim Fonteyne
- March 1, 2009
- Subjects: Banking, Emerging and frontier financial markets, Financial integration, Global financial crisis of 2008-2009, Inflation
- Keywords: country authorities, EU membership, NMS country, sovereign bond, WP
https://www.imf.org/en/publications/wp/issues/2016/12/31/five-years-after-european-union-membership-and-macro-financial-stability-in-the-new-member-22810